The rotation game, after touching RIL, Airtel, Tata Steel and State Bank of India has returned to the market's blue-eyed boy, infrastructure, reports Udayan Mukherjee.

It was a superb start to a crucial week, wobbles from the US market notwithstanding. In fact, the closing was amazing, the way stocks spurted on a mix of buying and short covering. Nowadays, the annoying day to day correlation with US market swings has snapped. About time, too.

The rotation game, after touching Reliance Industries, Bharti Airtel, Tata Steel and State Bank of India has returned to the market's blue-eyed boy, infrastructure. Larsen & Toubro has been a dream, these last few months. Despite such a heady run-up one struggles to find reasons to sell this stock down.

Assuming that it will deliver Rs 80 in earnings in 2008-09, and adjusting for the embedded value in its subsidiaries, it is tough to draw the line on this stock. Bharat Heavy Electricals, ABB and GMR Infrastructure continue to keep it very good company.

On Monday, even beaten down Hindustan Unilever found some takers on the buy-back news. This is an expected short-term spike that inevitably follows buy-back announcements. But a little bit more and serious investors will wonder why the Hindustan Unilever management is buying its own stock back and not investing in new growth areas. Hindustan Unilever needs to rediscover the growth magic, not support its stock price with gimmicks.

The market is well into its blowout stage. The euphoria may not be felt all around as this has not been a retail euphoria. The $5 billion, which gushed in in July so far, proves that the euphoria, if any, has been among global investors. But retail is getting in. The process has started. It may yet take a while to get there, but the buzz is getting louder. Every day.

There is a real estate listing today as well, HDIL. Frankly, I was a bit surprised that the issue was subscribed only about six times. I would have expected more given that the issue, even at Rs 500, came at a discount to the net present value of around Rs 525 a share. The grey market premium suggests a listing around Rs 530 but, fundamentally speaking, this stock looks good for Rs 600 if it is benchmarked to peers. Real estate, in any case, is quite hot now, led by DLF.